So here’s five things to think about as Russian planes burn through costly jet fuel, dumping their expensive exploding cargo.
Russia is burning through its foreign reserves.
The Russian economy is very dependent on oil exports. The massive drop in the oil price we’ve seen recently has hit Russian foreign reserves.
Russian bonds are already more expensive than Greece’s.
The interest rate on a 10 year Russian bond is hovering around the 11% mark. This is even higher than Greece, which was recently able to borrow at 8.28%.
Russian inflation is crazy high.
Western sanctions are affecting Russian prices. Most notably, at one point this year, cabbage prices were up almost 100%.
Russian interest rates are astronomical as well.
At least partially to defend the Ruble, the Russian Central Bank had to hike interest rates to a phenomenal 17% last year. They’ve come down but they haven’t had an impact on inflation and are still far higher than much of the rest of the world.
The Russian economy is contracting.
The end result of much of this data is an economy that is shrinking.
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